The department responded in writing this week to a request Grassley made in June. He had asked federal government officials to make sure consumers and businesses in smaller and mid-size communities "are not left out of the equation when the Justice Department analyzes mergers, and that special consideration be paid to disproportionately negative impacts on rural America."
This week, the Justice Department told Grassley that it looks not only at national markets or major metropolitan areas, but "at every geographic area that may be affected by a merger in deciding whether to take enforcement action. We have an array of weapons in our enforcemnt arsenal, ranging from in effect excising the anticompetitive portion of a merger to seeking to enjoin the merger in its entirety, and we'll do whatever it takes to prevent anticompetitive mergers."
As an example, the department cited its opposition to the 1996 merger between the Union Pacific (UP) and Southern Pacific (SP) railroads because it would substantially reduce competition in markets and routes used to ship farm produce, as well as raise prices for shippers and consumers of products begin shipped. In the end, the Surface Transportation Board (STB) approved the transaction in spite of the Justice Department's recommendation.
Grassley also had expressed concern about the UP/SP merger in 1996, for its negative impact on the Iowa branch line system used by Iowa grain shippers. He formally petitioned the federal STB to direct the railroads to resolve shipper problems before approval of the merger. The UP/SP merger that year resulted in a service breakdown and railcar shortages to the detriment of Iowa agriculture. Since 1996, Grassley has continued his outspoken advocacy for farmers and shippers who depend on the timely, affordable movement of grain to achieve a profit in the global economy.
"Today fewer rail lines are serving the nation's farmers, shippers, domestic buyers, and exporters. Since 1982, the major U.S. rail carriers have dwindled from more than 30 to six. I continue to be very concerned about the future of branch lines. An estimated 40 percent of 1997's crop is still in storage, and the upcoming harvest season may yield an unprecedented grain gridlock," Grassley said. This past June, the Iowa senator convened a meeting of farm representatives, transportation managers, commodity group leaders, and UP officials to prepare for the fall.
Grassley said today that while he is satisfied with the response received from the Justice Department, he will continue his work to ensure that the rural landscape is considered in on-going and future merger reviews conducted by federal officials.